The Federal Trade Commission is cracking down on debt collectors that “bullied, intimidated or scared” consumers into paying debts they didn’t owe or had already paid off, Illinois’ state attorney general said on Wednesday.
On Monday, the FTC announced it would settle a case against JP Morgan Chase for $150m, $50m of which will go back to consumers allegedly mistreated by one of the country’s largest financial institutions. The settlement is the highest-profile move among what the commission says are 115 regulatory actions taken against misbehaving debt collectors this year.
“They tell people that their wages are going to be garnished, they tell people they are going to send people out to arrest them, they tell people their driver’s licenses will be revoked, they tell people their children will be taken away, lawsuits will be filed against them, that they will be put into jail unless they pay up,” the state attorney general, Lisa Madigan, said. “So after you receive these phone calls at home or work over weeks or months, many people, even if they actually owe no money at all end up paying hundreds or thousands of dollars just to get these people to go away.”
Thirty million US consumers are being pursued for the repayment of at least one debt, said FTC commissioner Edith Ramirez, and while many of the billion-plus conversations between debtors and collectors are legal, “last year alone, consumers filed over 280,000 complaints with federal authorities related to debt collection”, she told reporters.
At the press conference, officials outlined a number of egregious offenses and, by way of example, played a threatening phone call from a collection agency to a local grade school. The caller’s employer, ChexSystems, was subsequently barred from collecting debts by the regulator.
One of the less-discussed factors behind what the FTC and the attorney general’s office characterized as “a nationwide problem” has been the growing amount of consumer information available in huge troves through digital black markets that criminals can either use to make large purchases on other people’s lines of credit, or to work as debt collectors themselves, Madigan said.
“If you give people your personal financial information, unfortunately, the reality is that they will use it to steal your money,” she said.
The increase in criminal debt collection is in some ways an echo effect of broader and less obvious crimes like the hacks of Target, eBay, health insurer Anthem and (twice) data-management giant Experian. Personally identifying information from hacked databases is used by unscrupulous collection agencies to identify a consumer’s credit checks – including those for loans that were never taken out – and then to contact those consumers to collect on nonexistent or already-paid “debts”.
Minnesota department of commerce commissioner Mike Rothman said a regular practice his department had cracked down on was “hiring people with criminal backgrounds who then, in turn, stole people’s credit card information and stole their money”.
This article was written by Sam Thielman, for theguardian.com on Wednesday 4th November 2015 21.30 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010